Federal Court of Australia

PepinNini Minerals Limited, in the matter of PepinNini Minerals Limited [2021] FCA 460

ORDERS

THE COURT ORDERS THAT:

1.    In respect of the 1,750,000 fully paid ordinary shares in the Plaintiff issued on 7 April 2021 (the relevant securities), the period of five business days referred to in section 708A(6)(a) of the Corporations Act 2001 (the Act) be extended pursuant to an order under section 1322(4)(d) of the Act to 30 April 2021.

2.    The notice under section 708A(5)(e) of the Act given to ASX Limited (ASX) in respect of the relevant securities within the period provided in order 1 be deemed, pursuant to an order under section 1322(4)(a), to take effect as if it had been given to the ASX on 7 April 2021.

3.    Pursuant to section 1322(4)(a) that any sale or offer for sale of the relevant securities during the period after their issue on 7 April 2021 until 27 April 2021 is not invalid by reason of:

(a)    the failure by the Plaintiff to give a cleansing notice under section 708A(5)(e) of the Act or a cleansing prospectus under section 708A(11) of the Act; and

(b)    the seller’s consequent failure to comply with sections 707(3) and 727(1) of the Act.

4.    Pursuant to section 1322(4)(c), any person who sold or offered for sale relevant securities during the period after the date of their issue on 7 April 2021 until 27 April 2021 is relieved from any civil liability in respect of any contravention in connection with the Plaintiff’s failure to give a notice in accordance with section 708A(5)(e) of the Act, including any contravention of sections 707(3) and 727(1) of the Act.

5.    The orders be entered forthwith.

6.    A sealed copy of these orders be served on the Australian Securities and Investments Commission and each person to whom the relevant securities were issued as soon as reasonably practicable.

7.    As soon as reasonably practicable, the Plaintiff is to publish an announcement to the ASX in which a copy of these orders is included.

8.    Any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of these orders has liberty to apply to vary or discharge the orders within 28 days of the publication of the announcement referred to in order 7.

9.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JAGOT J:

1    This is an urgent application, under s 1322 of the Corporations Act 2001 (Cth) (the Act), for an order extending the time to give a notice under s 708A(6)(a) of the Act and for consequential or ancillary relief.

2    The Court must not make an order under s 1322 of the Act unless it is satisfied, as the plaintiff submitted:

(a)    in the case of an order under s 1322(4)(a) of the Act, that, relevantly, the person(s) concerned in or party to the contravention or failure acted honestly, or that it is just and equitable that the order be made: s 1322(6)(a);

(b)    in the case of an order under s 1322(4)(c) of the Act, that the person(s) subject to the civil liability concerned acted honestly: s 1322(6)(b); and

(c)    in every case, that no substantial injustice has been or is likely to be caused: s 1322(6)(c).

3    Once it was discovered that the required cleansing notice had not been given as a result of inadvertent error, the plaintiff issued a request to the Australian Securities Exchange (the ASX) to suspend the plaintiff’s securities from the ASX, pursuant to rule 17.2 of the ASX Listing Rules. The securities have been suspended since 27 April 2021.

4    In the circumstances, and on the basis of the evidence before the Court, I am satisfied that the persons concerned in, or party to, the contravention constituting the failure to give the required notice within time acted honestly, and that it is just and equitable that the order which is sought be made.

5    Additionally, I am satisfied that the person subject to the prospective civil liability concerned acted honestly, and that no substantial injustice has been or is likely to be caused by the making of the relevant orders as sought.

6    The plaintiff’s written submissions comprehensively identify the relevant statutory provisions, principles and factual circumstances which have given rise to this application.

7    It is sufficient for the purpose of these reasons to identify, in summary form, the eight circumstances which the plaintiff has identified as supporting the making of the orders sought.

8    First, the plaintiff is an interested person for the purposes of s 1322 of the Act.

9    Second, the failure to lodge the cleansing notice, in respect of the relevant shares, was entirely inadvertent. It was a result of a pure oversight.

10    Third, I am satisfied that person who has sold, or offered for sale, the relevant shares did not know that the shares had been issued without the required cleansing notice and, otherwise, acted honestly within the meaning of s 1322 of the Act.

11    Fourth, the plaintiff acted promptly in taking steps to regularise the position. The error was identified on 23 April 2021, after which the plaintiff sought urgent legal advice and, within days, advised the ASX and requested the trading suspension had also advised each of the vendors, ASIC and brought these proceedings.

12    Fifth, and importantly, but for the failure to lodge the cleansing notice, the plaintiff could have satisfied the requirements of ss 708A(5) to (8) of the Act. Otherwise, as pointed out in the written submissions for the plaintiff, to the extent any purchaser might be able to prove that there was excluded information which should have been disclosed, in respect of which there is no evidence, they would have independent causes of action. Additionally, the orders that the plaintiff seeks include orders 7 and 8, which, relevantly, are:

7    the Plaintiff is to publish an announcement to the ASX, in which a copy of these orders is included; and

8    any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of the orders has liberty to apply to vary or discharge the orders within 28 days of the publication of the announcement required by order 7.

13    Sixth, if the orders are not made as sought, any sales of the relevant shares will continue to be unlawful. Further, the plaintiff’s securities are likely to remain suspended until the Court grants the relief sought.

14    Seventh, I accept it is appropriate that the Court make orders in accordance with proposed orders 1 and 2, extending the relevant time for the giving of the notice as sought in circumstances where the evidence discloses that some of the relevant shares have been sold.

15    Eighth, and finally, both ASIC and the ASX have been notified about the substance of the application. Neither ASIC nor ASX has appeared today, and both have provided letters to the effect that they do not oppose the application.

16    Apart from this, the only other matter I should note is proposed orders 3 and 4, which, in effect, declare that any sale, or offer for sale, between the relevant periods are not invalid by reason of the failure to give the cleansing notice and by reason of the consequential failures on the part of the seller, and relieve relevant persons from any civil liability in respect of the contravention of the requirement on the part of the plaintiff to give notice in accordance with s 708A(5)(e) of the Act.

17    My attention has been drawn to the recent decision of Beach J in Environmental Clean Technologies, in the matter of Environmental Clean Technologies Limited [2021] FCA 440, in which his Honour made an equivalent declaration and consequential orders. I am satisfied that in circumstances where, as in Environmental Clean, the reason for the non-compliance is pure inadvertence, and where no substantial injustice has been, or is likely to be, caused to any person, equivalent orders should be made.

Associate:

Dated:    5 May 2021